💼 PMEGP
Complete guide to Prime Minister's Employment Generation Programme for new micro enterprises
Overview
PMEGP (Prime Minister's Employment Generation Programme) is a credit-linked subsidy scheme aimed at generating employment opportunities by establishing new micro-enterprises in non-farm sectors. It is a central scheme aimed at employment generation through setting up new self-employment ventures.
- Status: The scheme has been extended for the 15th Finance Commission cycle (FY 2021-22 to 2025-26).
- History: Launched in 2008 by merging Prime Minister's Rojgar Yojana (PMRY) and Rural Employment Generation Programme (REGP).
- Implementing Agency: KVIC (Khadi and Village Industries Commission) is the nodal agency at the national level.
- State Level: State KVIC Directorates, KVIBs, DICs, and banks.
- Associated Organization: Coir Board for coir-related activities.
- Participating Banks: Public sector, regional rural, approved co-operative, private sector, and SIDBI.
- Objective: To help registered unemployed youth and traditional artisans become self-employed entrepreneurs.
About KVIC (Khadi and Village Industries Commission)
KVIC is the nodal agency that implements PMEGP at the national level.
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Overview
PMEGP (Prime Minister's Employment Generation Programme) is a credit-linked subsidy scheme aimed at generating employment opportunities by establishing new micro-enterprises in non-farm sectors. It is a central scheme aimed at employment generation through setting up new self-employment ventures.
- Status: The scheme has been extended for the 15th Finance Commission cycle (FY 2021-22 to 2025-26).
- History: Launched in 2008 by merging Prime Minister's Rojgar Yojana (PMRY) and Rural Employment Generation Programme (REGP).
- Implementing Agency: KVIC (Khadi and Village Industries Commission) is the nodal agency at the national level.
- State Level: State KVIC Directorates, KVIBs, DICs, and banks.
- Associated Organization: Coir Board for coir-related activities.
- Participating Banks: Public sector, regional rural, approved co-operative, private sector, and SIDBI.
- Objective: To help registered unemployed youth and traditional artisans become self-employed entrepreneurs.
About KVIC (Khadi and Village Industries Commission)
KVIC is the nodal agency that implements PMEGP at the national level.
| Parameter | Details |
|---|---|
| Established | April 1957 |
| Predecessor | Took over from the former All India Khadi and Village Industries Board |
| Social Objective | Employment creation |
| Economic Objective | Production of marketable items |
| Wider Objective | Encourage self-reliance, foster rural community bonds |
Functions of KVIC:
- Develop Khadi and village industries
- Maintain reserves of raw materials and tools
- Establish common service centers for raw material processing
- Market KVI products
- Train artisans
- Provide financial support to individuals and institutions for KVI
Note: Programs for urban industries is NOT a function of KVIC. Its mandate is focused on Khadi and village industries.
Key Features
The scheme provides financial assistance for setting up new projects (greenfield) only. Existing units are not eligible.
| Parameter | Details |
|---|---|
| Max Project Cost (Mfg) | ₹50 Lakh (Enhanced from ₹25L) |
| Max Project Cost (Service) | ₹20 Lakh (Enhanced from ₹10L) |
| Min. Age | 18 Years |
| Income Ceiling | No Income Limit applies. |
Eligibility Criteria
Who can apply?
- Individuals: Any individual above 18 years.
- Educational Qualification: 8th Pass is mandatory for projects costing above:
- ₹10 Lakh in Manufacturing.
- ₹5 Lakh in Service/Business.
- Institutions: SHGs, Co-operative Societies, Charitable Trusts.
Exclusion: Existing units or units that have already availed government subsidies (like PMRY, REGP) are not eligible. Only one person per family can avail the benefit.
Financial Assistance Structure
The scheme asks for a small contribution from the beneficiary (Margin Money) and provides a significant government subsidy.
1. Beneficiary Contribution (Own Share)
- General Category: 10% of the project cost.
- Special Category: 5% of the project cost.
Special Category Includes: SC, ST, OBC, Minorities, Women, Ex-servicemen, Transgenders, Differently-abled, NER, and Aspirational Districts.
2. Rate of Subsidy (Government Grant)
The subsidy depends on the location of the unit and the category of the applicant.
| Categories | Subsidy in Urban Area | Subsidy in Rural Area |
|---|---|---|
| General | 15% | 25% |
| Special | 25% | 35% |
- Rural Definition: Any area under Panchayati Raj Institutions is treated as Rural. Areas under Municipal Corporations are Urban.
This infographic acts as your ultimate cheat sheet for PMEGP! It visualizes the critical numbers you need to remember: from the maximum project costs and eligibility criteria to the exact subsidy and margin percentages across different categories.
How the Subsidy Works (Lock-in)
- Disbursement: The bank sanctions 90-95% of the project cost (90% for General; 95% for Special category).
- Subsidy Release: The subsidy is kept in a Term Deposit - Subsidy Reserve Fund (SRF) for 3 years under the beneficiary's name.
- Lock-in Period: This subsidy is locked for 3 years.
- No Interest is charged on the loan amount equivalent to the subsidy amount.
- No interest applies to the deposit or its corresponding loan amount.
- Adjustment: After 3 years, if the unit is functional, the margin money under PMEGP is officially adjusted/credited to the loan account.
- Bad Loan: If a loan goes "bad" within the three-year window, the subsidy is returned to KVIC. Any subsequent recoveries by the bank will be used to offset their remaining dues.
Bank Finance Details
| Parameter | Details |
|---|---|
| Loan Types | Term Loan (capital expenditure), Cash Credit (working capital), or Composite (both) |
| Security | None required for loans up to ₹10 Lakh (no collateral security needed) |
| Application Processing | Decision within 30 days of receipt |
| Loan Disposal | Loan application should be disposed of within 30 days |
Application Process
- Online applications are mandatory via KVIC's PMEGP Portal (this is where applicants must submit their applications).
- Implementing Agencies (IAs) decide within three weeks based on specific scoring criteria.
- Beneficiary Identification: Selection at the district level by agencies like KVICs, KVIBs, DICs, and banks.
Application Scoring
| Project Cost | Minimum Score for Forwarding to Banks |
|---|---|
| Up to ₹10 Lakhs | 50 out of 100 |
| Up to ₹25 Lakhs | 50 out of 100 |
| Above ₹25 Lakhs | 60 out of 100 |
Post-Sanction Process
- Post-sanction, the applicant submits their contribution and EDP training certificate with photo and Aadhaar to the bank within 30 working days.
- The bank releases the first loan installment and then files a claim for Margin Money subsidy.
- KVIC HQ will establish an Online Grievance Portal and Grievance Cell.
- Loan sanctions are issued online and shared with the applicant and relevant agencies within 30 days.
Entrepreneurship Development Programme (EDP)
Training is a crucial part of the scheme to ensure sustainability.
- Timing: Applicants can undertake EDP training before submission of the application.
- Requirement: Completion of EDP training is mandatory before the release of the subsidy.
- Duration:
- 5 Days for projects up to ₹5 Lakh.
- 10 Days for projects above ₹5 Lakh.
Project Eligibility Notes
- New Projects Only: Only new micro-enterprises can apply, excluding locally prohibited or negative list activities.
- Land Cost: NOT included in the Project Cost. However, cost of built shed/lease can be included (up to 3 years maximum).
- Family Limitation: Only one member (either self or spouse) can avail the benefit.
2nd Loan for Upgradation
Existing PMEGP/MUDRA units that are performing well can apply for a 2nd Loan to expand or upgrade.
- Max Limit: ₹1 Crore (Manufacturing) / ₹25 Lakh (Service).
- Subsidy: 15% (20% for NER/Hill States).
- Condition: The unit must be profit-making for the last 3 years.
- Lock-in: Eligible only after 3-year lock-in period.
- First Loan Status: Initial loans under PMEGP/REGP/MUDRA must be repaid in time (this is the required status for upgradation eligibility).
- Must be profit-making with potential growth post-upgradation.
What 2nd Loan Can Cover
- Construction of new building (up to 20% of total project cost)
- Capital expenditure up to 100% of original cost
- Working capital
- Business development programmes including raw material testing and marketing
- Technology upgradation including acquiring advanced machinery/equipment
- Digital empowerment including purchase of computers and accessories
PMEGP & MUDRA Integration
PMEGP units can also be linked with the MUDRA scheme for additional support:
- Existing PMEGP units are eligible for 2nd loan under PMEGP or can graduate to MUDRA financing.
- Forward linkages provided through awareness camps, workshops, EDP, and Skill Development Programmes.
- PMEGP units must apply for Udyam Registration to register online as MSMEs.
Model Village Industries Projects
KVIC has prepared Model Village Industries projects that are linked with the PMEGP scheme:
- Model Projects of different KVI activities can be taken up under PMEGP
- These serve as templates for potential beneficiaries to set up viable enterprises
- Helps standardize project planning and improve success rates
Summary Cheat Sheet
| Concept / Topic | Key Details / Explanation |
|---|---|
| Objective | Generate employment by setting up new micro-enterprises (Greenfield only). |
| Nodal Agency | KVIC (Khadi and Village Industries Commission). |
| Max Project Cost | ₹50 Lakh for Manufacturing sector. ₹20 Lakh for Service/Business sector. |
| Eligibility (Age & Income) | Min Age: 18 Years. No income ceiling applies. |
| Education Criteria | 8th Pass required for projects costing above ₹10 Lakh (Mfg) or ₹5 Lakh (Service). |
| Beneficiary Contribution | 10% for General Category. 5% for Special Category (SC/ST/OBC/Women/PH). |
| Subsidy (Margin Money) | Urban: 15% (General), 25% (Special). Rural: 25% (General), 35% (Special). |
| Subsidy Lock-in | Kept as TDR (Term Deposit) for 3 years. No interest charged on this amount. |
| EDP Training | Mandatory before subsidy release. Duration: 5 to 10 days. |
| 2nd Loan (Upgradation) | Available for performing units. Limit: ₹1 Crore (Mfg) / ₹25 Lakh (Service). Subsidy: 15-20%. |
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